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By The Numbers, Mobilit/e Virtual Conference, CATL Swapping - SAI Newsletter 3



 

We are just over a week away from CNY – Tiger edition and the Beijing Olympics. One of the perks I thought I was going to have for living in 北京, was sadly taken away yesterday. It looks like live attendance for events will be very limited and for the folks with the right ‘关系’ which I, unfortunately, do NOT have. Since we are talking sports, I did want to promote my good friend’s new book, ‘Sporting Superpower’ by Mark Dreyer, a sports fanatic and former journo and who I’d say is the equivalent to Lei Xing for China sports history. It’s a terrific look back starting with Beijing 2008 Summer Olympics until now where we come full circle and have Beijing hosting the Winter Olympics. A must-read for sports buffs & enthusiasts whether you're a close follower of China or not. He’s gotten to do quite a few unique things that if you want to know what, you’ll have to read up about in the book! For last week’s pod, Lei went over a bunch of numbers that made my head spin. They are worth repeating for those who don’t have the chance to listen to the pod, so here goes:

  • Total 2021 China NEV sales: 3.52M vehicles, 26M total passenger vehicle sales

  • Total (est.) 2021 NEV European sales: 2M

  • Total (est.) 2021 US NEV sales: 600K, 16M total passenger vehicle sales

  • 75% of NEVs sold in China came from Chinese domestic brands

  • December China NEV sales: 530K (China in one month sold almost as many NEVs that the US did in all of 2021)

  • ~19% take rate for NEVs (if exports are included). China’s goal is 20% by 2025. We should get that number by next year – easy

  • 13.4% take rate if exports are taken out

  • 310K NEVs exported, more than half of those were Tesla’s to Europe

  • In China at the end of 2021: 75K charging stations with 2.62M charging piles

  • For reference - In the US at the end of 2021: 46K charging stations with 113K charging piles

  • At the end of 2021 in China: 1,298 swapping stations – YES, swapping stations

Finally, I’d mentioned that we have been working on something BIG for the month of February and I am ready to reveal what we’ve been back in the lab doing. It’s a fully virtual two-week, immersive global conference called Mobilit/e that’ll take you through all facets of the EV. It’s being co-organized by our friends at Climate Transformed and it’s going to be MEGA. Mobilit/e Virtual Conference To be clear, this is not a China-focused event and the participants will come from Asia, Europe, the US …basically all over the world. Each day we will dedicate to one subject like batteries, connected, policy, raw materials, autonomous, if it has anything to do with future mobility and/or electric vehicles, we’ll likely talk about it. We are close to finalizing the participant list but for those that already follow the space closely, you’ll easily recognize many of the names and faces. We also wanted to highlight some up-and-coming startups so we will have them sprinkled throughout the two-week event as well. All of us are excited to bring this major event in February so I hope that you’ll be able to join a few of the discussions! The link for sign up will be shared VERY SOON! Please join Lei and I for our EVs & More Twitter Spaces room – 01/20/22 Thursday, 9pm EST/01/21 Friday, 10am China local time. To join the room, you can follow me at: @sinoautoinsight and/or Lei at: @leixing77 For those that aren’t able to join, the EVs & More podcast is available wherever you grab your podcasts from. Most of our back pods are posted and the descriptions will be able to tell you what we discussed that particular episode. IN THE NEWS - Cadillac’s own NIO Houses to promote the brand, engagement and loyalty. Cadillac’s 4th IQ Space in Shanghai was actually opened back in December but with the recent announcement about opening 10 more across various Chinese cities within the next 6 months, I thought it was worth writing on. I was told about these 'Spaces' being opened but there hasn’t been a store opened in Beijing YET so I’d not paid much attention. That’s going to happen inevitably so I’ll get with my moles to figure out where and when and then perhaps see if I can’t get invited to its opening! Expect more premium brands to follow this playbook as they look to wall off their customers by piloting different types of customer engagement strategies to see what resonates most with them - While trying to attract more prospective buyers & followers. Although it was one of the investments that almost pushed NIO into bankruptcy, customer engagement via their app and NIO Houses has been paying off lately. The NIO app has a pretty big MAU (monthly active user) number >350K. Seeing as they’ve only sold a total of ~160K cars to date, it’s pretty significant engagement. They also felt strongly enough about it to launch a local NIO app for Norway. Will Cadillac try this same strategy in the US? Hmmm…. - Speaking of the US Big Three, Ford Motor (or what my old colleagues would call Ford’s) is leaning heavily into the China thing. I’ve written about Ford’s China struggles before and for the sake of full disclosure, I was a Ford Shanghai employee in a prior life (x2 as I interned in Dearborn between my 1st & 2nd year of grad school as well) so it’s no surprise that they’ve decided to go ALL-IN on China. If Ford is to remain a ‘global’ company, as opposed to one that is successful in one primary market, they need to address local needs with locally designed and developed products AND services. The design center aims to tackle that need head-on. For my old Ford colleagues that read this newsletter, I’d love to come visit the facility so let me know when I can stop by! I remember during my internship a lifetime ago, all my Carnegie Mellon classmates and I were invited into the Dearborn design studio by Hau Thai-Tang (also a CMU grad), Ford’s current Chief Product Platform and Operations Officer who at the time was the Mustang Chief Engineer. He may be the highest ranking Asian (descent) American in a western automotive OEM as well. Inspirational, for sure. He walked us through the entire studio and told us all about how design and engineering decisions were made to come up with that year’s version of the Mustang. One of the coolest automotive experiences I’ve ever had. The topper was heading over to another design center that had a Ford GT parked front and center in the middle of the large auditorium-like room. Hau started the engine. That beautiful noise (the engine purring and then exploding) filled that room and made me think to myself – I gotta get one of these! For some proof of the good work that the China design team is doing, all you need to do is have a look at the Mondeo that was just unveiled & the Lincoln Zephyr Reflection. Both supposedly were primarily designed in China. I hope my readers in the US like the Mondeo, it could be a replacement for the Fusion there. - Picture in time – What’s going on in the US for EVs NOW. Anytime there’s an article by a legit, major media publication that has Detroit in the title, I gotta link it, right? Anyway, I would be remiss to not post about the recent CES and the announcements made by the traditionals including GM & Stellantis, which I still consider part of the BIG THREE since they own Chrysler and Dodge. The Ford F150 Lightning & Chevy e-Silverado are lynchpin products if the US is gonna get off on the right foot towards jumpstarting wide EV adoption. This is a good article from WSJ's Ben and Nora BTW. So make sure to click the link. I have to admit that I’ve recently noticed the trend of articles about the US writing less about being skeptical about EVs and now moving into the ‘how fast’ can things get done. As in how fast can the US adopt EVs, how fast can battery capacity be increased, how fast can charging infrastructure be installed to support this wide adoption, how fast do we need to go to catch up to Europe, then China, and finally how fast can we get these smart vehicles to drive themselves around while we watch Netflix on our center consoles? All questions that are moving us into the right conversation. But some of the ‘how fast’ questions need to be redirected, presented differently, or abandoned altogether. First, if we are chasing China for EV supremacy going by numbers, we lost that race before it’s begun. They’re pretty far ahead and I don’t see them slowing down. More importantly, they’ve been the #1 passenger vehicle market in the world since 2009. That means that we need to be clear on how we define ‘catch up’ or ‘beat’ because defined by something other than a quantity, we still have a terrific chance. Now, we can conceivably beat Europe in similar terms although if we are keeping score, they are at 2M NEV units sold (give or take) to our 600K sold (give or take) in 2021. Lots of investment is happening in the US in support of the EV sector but we gotta do more. I do know that many of the European countries have advertised that they are ‘open for business’ meaning that they are trying to attract investment from Chinese EV & battery cell manufacturers because they too know, to succeed and lead in Europe means to build there. See Tesla as an example. That means faster and more. And even the ‘how fast’ questions seem to be a bit premature. We HAVE to pass that infrastructure bill so that we can incentivize people to buy EVs. And then we need MORE OEMs & hopefully EV first startups, tech companies, and others that are pivoting to develop, design, and launch even MORE EVs at all different pricepoints. It can’t be led by just a few companies. That’s NOT the case in China and it’ll take longer if there isn’t fierce competition among a combination of legacies, EV first, and ultimately tech companies that will push the innovation farther and faster. I am a believer. I have seen it. I am currently helping companies do it here in China. Now, let’s make it happen in the US! (just stepped off my soapbox). We are here to help! GET SMARTER - Our reminder that EVs have batteries in them that shouldn’t be shipped from halfway around the world in order for the US market to grow. I seem to be pretty popular this week among the journos although I’d spoken to Lili Pike about this article a month or so back when this just launched media outlet called Grid was still in stealth. It’s a new year so companies, sectors, countries have recently had their deep, long looks into the mirror to see how screwed they actually are when it comes to EV adoption and local manufacturing for battery cells. I wouldn’t call this a deep dive but it’s a pretty significant long-read that gets you well versed in the battery debate and what needs to happen for countries to develop their homegrown sectors and NOT try to compete with other much larger, well-financed countries (read: China). At least not on quantity anyway. Perhaps dedicate a substantial of funding on new, different battery technology. This article checks most boxes. It talks about the US, raw materials, capacity, CATL, non-US/China players demand, national security, whether or not the ROW players matter, and what to do next. Again, worth the click for those who want that battery cell primer. THE MOST INTERESTING THINGS FROM LAST WEEK - Spotlight on battery swapping. In a move that surprised no one (that’s been closely following the space anyway), CATL decides to throw their hat into the ‘service’ ring by launching a battery swapping service ála NIO, A Better Place, and the US’s Ample. It was a pretty short little preso so there are still a ton of questions about the particulars but if the largest battery cell manufacturer on the planet decides it’s launching a new battery-related service, people (and countries) sit up and take notice. One thing is for sure, if I were NIO, I may not be that happy if they start trying to attract the premium end for this service, especially since NIO and CATL have a pretty tight relationship already. Maybe this is where NIO comes in and licenses their own technology to head CATL off at the pass? This IS about world domination though, right? I am sure that in NIO’s boardroom, they’re not wondering if any of their business decisions are going to hurt CATL’s or anyone else’s feelings. TRENDING ON SOCIAL MEDIA - If you’re wondering, China EV Inc is not prejudiced – they will invade any country's automotive sector using any type of vehicle they can as evidenced by what’s happening in Japan. So – like I said, I didn’t speak with all of the journos who wrote these articles this week, it just seems that the articles all posted within the last week or so. Shiho Takezawa from Bloomberg contacted me to ask about these small, electric delivery vans invading Japan that undercut similarly made Japanese vans by thousands of dollars. The pandemic accelerated purchasing online globally and with more online transactions, that means there are naturally more deliveries. On top of that, the Japanese govt. mandated eliminating carbon emissions so the best way to do that? Transition that delivery fleet over to electric. This is similar to what’s happening with Amazon, Walmart, and UPS all announcing purchases from companies like Rivian, Arrival, and Brightdrop to supply them with electric delivery vans in the US & EU. This is a record that Japan has heard play already – China EV Inc, or more appropriately BYD owns 70% share of the electric bus market in Japan. That’s a MASSIVE number! Seems like Europe is next, then the US at least on the passenger side. So what will THEY do about it? - The makers of HiPhi – Human Horizons look to be going public later this year in HK. Currently, HiPhi is basically the only domestic Chinese premium EV maker around so they enjoy blue ocean for the time being. They’ve turned that into 4,237 vehicles sold in 2021 with momentum building in December when they sold 919 or ~21% of the year’s total sales. They will also launch a smaller, sportier coupé/hatchback called the Z later this year as well. A recipe for growing volume exponentially – launch more than one product. Li Auto will also learn that later this year. - Making the Mercury News! NIO is reported to be moving to bigger and better things. Literally, they’ve leased a new larger building in San Jose. I remember the last time I was there, I drove by their current HQ which was nothing that really stands out. That’s my old hood! It seems that entering the US market is imminent. BY THE NUMBERS - 158%. That’s how much the NEV market grew in China compared to 2020. I had a nice, long chat with Mark Rainford about the China EV space for his terrific article that recently posted on autocar.com, a pretty popular UK automotive media outlet. Mark hits ALL of the high notes with the article and talks about Tesla, NIO, Xpeng, and of course the Wuling Hongguang Mini EV. Worth a read for those looking to get more into the details of these numbers. If you’re wondering why I used ‘long’ as the adjective in describing my chat with Mark, it’s because he currently resides in Xi’an and was in no hurry at all. —— This weekly newsletter is a collection of articles we feel best reflect the happenings of the week or important trends that have effects on the automotive and mobility sectors here and in the US, we also provide a point of view that we hope educates and sparks debate. The Sino Auto Insights

 

Sino Auto Insights is a Beijing, China-based market research and advisory firm that specializes in assisting companies analyze, strategize, and develop products and services that will shape the future of mobility and transportation. Members of our team have experience working in Detroit, Silicon Valley as well as here in China across multiple sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA, and many others.

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